This year has been challenging for Bitcoin (BTC +1.20%), which has seen a 7% decline and appears unlikely to regain the $100,000 mark before 2026.
To add to the woes of crypto investors, gold continues to reach new peaks, rising over 70% this year. This has prompted many to ask the pressing question: Wouldn’t it be wiser to invest in gold instead of Bitcoin?
Comparative Historical Performance
Analyzing Bitcoin and gold’s annual performances from 2012 to 2024 reveals that Bitcoin significantly outpaced gold in 10 of those 13 years. During that period, Bitcoin emerged as the top-performing asset class.
In seven of those years, Bitcoin achieved returns exceeding 100%. Notably, in 2013, it surged by an astounding 5,428%, a feat unmatched by gold.
While gold outperformed Bitcoin in three years, those instances coincided with Bitcoin’s significant declines: losing 57% in 2014, 74% in 2018, and 64% in 2022. In contrast, gold managed slight gains during those times. For example, in 2022, gold’s value increased by only 0.4%, which aligns with its role as a safe haven during market downturns.
The Validity of the “Digital Gold” Concept
Bitcoin is often dubbed “digital gold,” represented as a gold coin despite existing purely in digital form. Much like gold, Bitcoin has a capped total supply of 21 million coins, with nearly 20 million already mined.
This comparison of market capitalizations illustrates the stark difference: gold’s market cap is about $32 trillion, while Bitcoin’s stands at roughly $2 trillion. According to Michael Saylor, Bitcoin is expected to match gold’s market cap, suggesting a potential tenfold to fifteenfold increase in Bitcoin’s value over the next decade. This could see Bitcoin’s price soar past $1 million.
However, the diverging performances of Bitcoin and gold challenge the “digital gold” narrative. If gold has increased by 70% this year, shouldn’t Bitcoin reflect a similar growth? Looking ahead, 2026 appears to be a crucial year for Bitcoin. If this gap persists, the notion of Bitcoin as “digital gold” may lose credibility, reverting to its status as a volatile risk asset.
Investment Perspective: Short vs. Long-Term
Ultimately, the choice between Bitcoin and gold hinges on your investment horizon. For those focusing on the next year, gold is a safer, more stable choice amidst economic uncertainty. Conversely, for those looking beyond a year, Bitcoin’s history of outperforming gold over the past decade suggests it may rebound and regain its past momentum. Therefore, I plan to stick with Bitcoin into 2026.
